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# OAR Box 1828 Prepped by Ollie Stewart



## Document

Number: 

# 311 ) IV-B-1 5
Docket Number: 

# A-83-2 7

Printed 11/12/2008 11:12:59 AM Sheet 311 of 325P. 2



### : « 

### 7. 

# A-83-2 7

CORPORATIO N IV-B-1 5



### MEMORANDU

M

DATE : Apri l 15 , 198 7 TO : Fre dPorte r an d Wal t Stevenson , EPA/SD B FROM : Edwar dAul , Radia nCorporatio n SUBJECT : Impact s o f Ne w Fue l Price s o

nS0 2 

### Emissio nCredit s fo r Cogeneratio n System s an

d Mixe dFuel-Fire dSteam Generatin g Unit s

1. 0 INTRODUCTIO N

I nAugus t 1986 , fue l pric e projection s fo r coal , oil , an d natura l ga s 1- 3 supplie dt o industria l market s wer e revised . Thi s mem o assesse s th e impact s o f thes e ne w fue l price s o

nth e previou s analyse s o f emissio n credit s fo r cogeneratio nan d mixe dfuel-fire dstea m generatin g unit s (i.e. , boilers) . Th e previou s analyse s wer e presente dinth e report s A nAnalysi s o f th e Cost s an

d Cos t Effectivenes s o f Allowin g SO, . Emissio nCredit s fo r Cogeneratio nSvstem s (Marc h1985 ) an d A nAnalvsi s o f th e Cost s an d Cos t Effectivenes s o f S0 2 

### Contro l fo r Mixe dFuel-Fire dSteam Generatin g Unit s (Januar y 1986). 4 

### ' 5 

### Th e previou s analyse s wer e base donfue l price s projecte din198 4 (a s discusse di nReference s 4 an d 5) . Th e revise dprojection s (se e Reference s 1 , 2 , an

d 3 ) contai ntwo pric e scenarios : a highoi l pric e scenari o an d a lo w oi l pric e scenario . Th e low oi l pric e scenari o wa s utilize dt o asses s th e impact s o f ne w

fue l prices . I nadditio nt o thes e fue l pric e changes , mino r modification s wer e mad e t o th e methodolog y

fo r calculatin g capita l an d non-fue l operatin g an d maintenanc e cost s fo r th e subjec t units . Thes e modification s ar e discusse d i nful l i nReference s 6 an d 7 . Thes e modification s hav e ha d a negligibl e effect , however , o

nthi s assessmen t o f ne w fue l pric e impacts .
2. 0 RESULT S O F ANALYSE S
Th e result s o f th e analyse s o f ne w fue l pric e impact s (a s discusse di n detai l i nReference s 6 an d 7 ) ar e summarize di nTable s 1 throug h6 . Thes e
Progres s Center/320 0 E

. Chape l Hil l Rd./Nelso n Hwy./P.O

. Bo x13000/Researc h Triangl e Park

. N.C

. 27709/(919)541-910 0TABL E 1 . INCREMENTA L COS T EFFECTIVENES S O F NO T PROVIDINGEMISSION CREDIT S FO

R COAL-FIRE D COGENERATION UNIT S (Augus t 198 6 Pric e Projections ; Jun e 198 5 $ )

Regulator y

Alternativ e Fue l n g Typ e 50,/ J (l b S0 2 /a1111o n Btu )

62 4 40 9

2,38 4 2,38 4 (1.45 ) (0.95 )
(5.54 ) (5.54 ) REGIO N

Annualize d Cos t (Sl.OOO/yr )
9,65 0 9.81 0

10,41 0 10,44 0 V Annua l

Emi ! ssion s Mg/y r (tons/yr )

93 4 60 8

37 2 27 2 (1,030 ) (670 )
(410 ) (300 ) Incrementa l

Cos t Effectivenes s S/M g ($/ton )

49 0 (445 )

30 5 (27 7 Fue l Typ e n g S0_/ J (l b S0 2 /m1l1lo n Btu )

62 4 40 9

40 9 40 9 (1.45 ) (0.95 )
(0.95 ) (0.95 ) REGIO N

Annualize d Cos t (Sl,000/yr )
7,93 0 8.01 0

8,60 0 8,61 0 VII I

Annua l Em 1 ssion s Mg/y r (tons/yr )

934 60 8

6 3 4 5 (1,030 ) (670 )
(70 ) (50 ) Increnenta l

Cos t Effectivenes s $/M g

22 7

63 8 (S/ton )

(206 )

(579 ) Lo w Sulfu r Coa l Wit hEmissio nCredit * . Withou t Emissio nCredi t

Percen t Reductio n Wit hEmlsslonCredlt 0 Withou t Emissio nCredit "

^ *73 1 ng/ J (1. 7 lb/millio nBtu ) S0 2 emissio nlimit .

b 51 6 ng/ J (1. 2 lb/millio nBtu ) S0 2 emissio nlimit .
c 8 7 percen t SO - reduction . 9 0 percen t SO . reduction , incrementa l cos t effectivenes s value s wer e calculate dbefor e roundin g annualize dcosts .

C OTABL E 2 . INCREMENTA L COS T EFFECTIVENES S OF NO T PROVIDIN G EMISSIO

N CREDIT S FO ROIL-FIRED COGENERATIO N UNIT S (Augus t 198 6 Pric e Projections ; Jun e 198 5 $ )

Regulator

y Alternativ

e Fue l Type n g SO-/ J (l bS0 2 /mmio n Btu ) Annualize d Cost1 " ($l,000/yr ) Annua l

Emission s Mg/y r (tons/yr ) Incrementa l Cos t

Effectivenes s $/M g ($/ton )

Lo w Sulfur Oi l Wit hEmissio

nCredit * . Withou t Emissio

nCredi t 68 8 (1.6 ) 34 4 (0.8 ) 5,94 0 6,31 0 

### 1,03 0 (1,135 )

51 5 (570 ) 72 0 (653 )

c o Percen t Reductio n Wit hEmissio

nCred1t c Withou t Emissio

nCred1t £ 1,29 1 (3.0 )

1,29 1 (3.0 ) 6,55 0 6,56 0 20 0 (220 )

14 5 (160 ) 18 2 (167 )

*68 8 ng/ J (1. 6 lb/mil l 1o n Btu ) S0 2 emissio

nUmit . *34 4 ng/ J (0. 8 lb/m1ll1o n Btu ) S0 2 emissio

nUmit .

c 8 7 percen t S0 2 reduction . 9 0 percen t SO

_reduction , incrementa l cos t effectivenes s value s wer e calculated befor e roundin g annualize

d costs . Base d o n Regio nV fue l prices .

T lTABL E 3 . INCREMENTA L COS T EFFECTIVENES S OF NO T PROVIDINGEMISSION CREDIT S FOR COMBINE D CYCL E UNIT S Fully-Fire dCoal f (Augus t 198 6 Pric e Projections ; Jun e 198 5 S )

Regulator yAlternativ e
Lo w Sulfu r Coa l Wit h Emissio n Credit 8 Withou t Emissio n Credit 0

Percen t Reductio n Wit h EmlsslonCredlt 0

. Withou t Emissio n Credi t Fue l Typ e n g SO-/ J (l b S0 2 /m1lT1o n Btu )

62 4 (1.45 ) 40 9 (0.95 )

2,38 4 (5.54 ) 2,38 4 (5.54 ) REGION

AnnualIze d Cos t (Sl.OOO/yr )

2.08 0 2,17 0

2,60 0 2,63 0 V
Annua l

Emission s Mg/y r (tons/yr )

51 7 (570 ) 33 6 (370 )

22 7 (250 ) 15 4 (170 ) Incrementa l

Cos t Effectivenes s S/M g (S/ton )

47 8 (430 )

27 4 (250 ) Fue l Typ e n g SO./ J (l b S0 2 /m1l1lo n Btu )

62 4 (1.45 ) 40 9 (0.95 )

40 9 (0.95 ) 40 9 (0.95 ) REGION

AnnualIze d Cos t (Sl.OOO/yr )

1,05 0 1,08 0

1.51 0 1,52 0 VII I

Annua l Emission s Mg/y r (tons/yr )

51 7 (570 ) 33 6 (370 )

3 6 (40 ) 2 7 (30 ) Incrementa l

Cos t Effectivenes s S/M g (S/ton )

13 3 (120 )

83 8 (760 )

a 73 1 ng/ J (1. 7 lb/millio nBtu ) S0 2 emissio nlimit . °51 6 ng/ J (1. 2 lb/millio nBtu ) S0 2 emissio nlimit .
c 8 7 percen t S0 2 reduction . 9 0 percen t SO

_reduction , incrementa l cos t effectivenes s value s wer e calculate dbefor e roundin g annualize dcosts . f I nthi s mode l system th e ga s turbin e wa s assume dt o fir e natura l ga s an d th e stea

m generatin g uni t wa s assume dt o fir e th e liste dcoal .

T l C* lTABL E 4 . INCREMENTA L COS T EFFECTIVENES S O F NO T PROVIDIN

G EMISSIO

N CREDIT S FO ROIL-FIRED COMBINE D CYCL E STEA

M GENERATIN

G UNITS 1 (Augus t 198 6 Pric e Projections ; June 198 5 $ )

Regulator

y Alternativ

e Fue l Type n g SO./ J (l bS0 2 /mmio n Btu ) Annualize d Cost * ($l,000/yr ) Annua l

Emission s Mg/y r (tons/yr ) Incrementa l Cos t

Effectiveness* ^ S/M g ($/ton )
FullY-F1red Lo w Sulfu r Oi l Wit hEmissio

nCredit 8 Withou t Emissio

nCredit 1 1 68 8 (1.6 )

34 4 (0.8 ) 2,42 0 2,63 0 57 2 (630 )

29 0 (320 ) 71 4 (648 )
Percen t Reductio

n Wit hEmissio

nCredit 0 Withou t Emissio

nCredit 0 Supplementary-Fired
Lo w Sulfu r 01 1 Wit hEmissio

nCredit 6 . Withou t Emissio

nCredit " Percen t Reductio

n. Wit hEmissio

nCred1t T Withou t Emissio

nCredit " 1,29 1 (3.0 )

1,29 1 (3.0 ) 2,85 0 2,86 0 10 9 (120 )

8 2 (90 ) 35 7 (324 )

1,29 1 (3.0 ) 34 4 (0.8 ) 1,29 1 (3.0 ) 1,29 1 (3.0 ) 2,27 0 2,63 0 3,14 0 3,21 0 1,07 0 (1,180 )

29 0 (320 )
29 9 (330 ) 8 2 (90 ) 45 6 (414 )

34 0 (309 )

a 68 8 ng/ J (1. 6 lb/millio nBtu ) S0 2 emissio

nlimit . b 34 4 ng/ J (0. 8 lb/mi l Ho nBtu ) S0 2 emissio nlimit . c 8 7 percen t S0 2 reduction . d 9 0 percen t S0 2 reduction . e l,29 1 ng/J (3. 0 lb/millio nBtu ) emissio

nlimit . 6 9 percen t S0 2 reduction , incrementa l cos t effectivenes s value s wer e calculate d before roundin

g annualize

d costs . Based o nRegio nV fue l prices . 1 I n thi s mode l syste m the ga s turbine wa s assume d t o fire natura l ga s an d the stea

m generatin

g uni t wa s assume

d t o fire the liste d oil .TABL E 5 . INCREMENTA L COS T EFFECTIVENES S O F NO T PROVIDIN

G EMISSIO

N CREDIT S FO RMIXE D FUEL-FIRED STEA M GENERATIN

G UNIT S FIRIN

G COA L WIT H NONFOSSI L FUE L (Augus t 198 6 Pric e Projections ; Jun e 198 5 $) f

Regulator

y Alternativ

e Fue l Typ e n g SO ? / J (l bS0 2 /m1ll1on Btu) 9 Annualize d Cos t ($l,000/yr ) Annua l

Emission s Mg/y r (tons/yr ) Incrementa l Cos t

Effectivenes s $/M g ($/ton )

Lo w Sulfur Coa l Wit hEmissio

nCredit 3 Withou t Emissio

nCredi t 90 4 40 9 (2.1 ) (0.95 ) 4,00 5

4,09 4 15 1 (166 )

6 8 (75 ) 1,08 2 (982 )

o** > Percen t Reductio n Wit hEmissio

nCredit 0 Withou t Emissio

nCred1t ( 

### 90 4 (2.1 )

90 4 (2.1 ) 4,34 9

4,36 7 7 2 (80 )

1 2 (13 ) 30 0 (272 )

a l,07 5 ng/J (2. 5 lb/m1ll1o n Btu ) S0 2 emissio n Umit
. 3 51 6 ng/J (1. 2 lb/m1ll1o n Btu ) S0 2 emissio n Hm1t
.
c 5 0 percen t SO- reduction
. 9 0 percen t S0 2 reduction , incrementa l cos t effectivenes s value s wer e calculate d befor e roundin g annualize d costs . Base d o n Regio n X fue l prices
. 9 Th e fue l mixtur e wa s assume

d t o be 8 0 percen t nonfossi l fue l an d 2 0 percen t coal ; th e coa l fire d 1 s liste d unde r fue l type .

T lTABL E 6 . INCREMENTA L COS T EFFECTIVENES S O F NO T PROVIDIN

G EMISSIO

N CREDIT S FO RMIXE D FUEL-FIRED STEA M GENERATIN

G UNIT S FIRIN

G OI L WITH NONFOSSI L FUE L (Augus t 198 6 Pric e Projections ; Jun e 198 5 $) f

Regulator

y Alternativ

e Fue l Type n g SO_/ J (l bS0 2 /m11l1on Btu) 9 Annualize d Cos t ($l,000/yr ) Annua l

Emission s Mg/y r (tons/yr ) Incrementa l Cos t

Effectivenes s $/M g ($/ton )

Lo w Sulfu r 01 1 Wit hEmissio

nCredit * Withou t Emissio

nCredi t 

### 1,29 1 (3.0 )

34 4 (0.8 ) 3,83 7

3,91 1 21 5 (237 )

5 7 (63 ) 47 1 (427 )

Percen t Reductio

n Wit hEmissio

nCredit 0 Withou t Emissio

nCred1t c 

### 1,29 1 (3.0 )

1,29 1 (3.0 ) 4,20 7 4,23 4 

### 10 3 (114 )

1 7 (19 ) 31 4 (285 )

a l,29 1 ng/

J (3. 0 lb/millio n Btu ) S0 2 emissio n limit
. b 34 4 ng/

J (0. 8 lb/m1ll1o n Btu ) S0 2 emissio n limit
.
c 5 0 percen t S0 2 reduction
. 9 0 percen t S0 2 reduction , incrementa l cos t effectivenes s value s wer e calculate d befor e roundin g annualize d costs . Base d o n Regio n I fue l prices
. ^ h e fue l mixtur e wa s assume

d t o be 8 0 percen t nonfossi l fue l an d 2 0 percen t oil ; th e oi l fire d 1 s liste d unde r fue l type .

T l C OP. 9



### result s canb e compare ddirectl y wit hth e correspondin g table s inth e previou s analyses . A noveral l compariso no f th e incrementa l cos t effectivenes s result s fro m th e curren t an

dprio r analyse s show s tha t th e new fue l price s hav e littl e impac t onth e cos t effectivenes s o f emissio ncredit s fo r cogeneratio n an dmixe dfuel-fire dboilers . Usin g th e new fue l prices , th e cos t effectivenes s o f th e additiona l emissio nreduction s achieve db y no t providin g emissio ncredit s unde r standard s base donfirin g low sulfu r fuel s fo r cogeneratio nsystem s ha s decrease dslightly . I t i s now inth e rang e o f $10 0 t o 700/Mg ($10 0 t o 700/ton) ; inth e previou s analysi s i t wa s inth e rang e o f $ 0 t o 1,100/M g ($ 0 t o 1,000/ton) . Similarly , fo r mixe dfuel-fire d boilers , th e cos t effectivenes s o f th e additiona l emissio nreduction s achieve dunde r standard s base donfirin g lo w sulfu r fuel s ha s als o decrease d slightly . I t i s now

inth e rang e o f $50 0 t o 1,100/M g ($40 0 t o 1,000/ton ) usin g th e new

fue l prices ; inth e previou s analysi s i t wa s inth e rang e o f $70 0 t o 1,100/M

g ($60 0 t o 1,000/ton) . Fo r standard s requirin g a percen t reductio ninS0 2 

### emissions , th e cos t effectivenes s o f th e additiona l emissio nreduction s achieve db y no t providin g emissio ncredit s fo r cogeneratio nsystem s ha s no t changed . I t remain s inth e rang e o f $20 0 t o 1,100/M g ($20 0 t o 1,000/ton) . Similarly , fo r mixe dfuel-fire dboilers , th e cos t effectivenes s o f th e additiona l emissio nreduction s achieve db y no t providin g emissio ncredit s als o remain s th e same - - i nth e rang e o f $30 0 t o 500/Mg ($30 0 t o 400/ton) . Thes e result s ar e consisten t wit hwha t on e woul dexpect . Unde r standard s base do nth e us e o f low sulfu r fuels , anemissio ncredi t permit s th e firin g o f a highe r sulfu r fuel . Thu s th e cos t effectivenes s o f th e additiona l emissio nreductio nachieve db y no t providin g anemissio ncredi t (i.e. , requirin g th e firin g o f a lowe r sulfu r fuel ) i s merel y th e sulfu r premiu m o r differenc e 1 npric e betwee nth e low sulfu r an

dhighe r sulfu r fuel . Sinc e th e sulfu r premium s inth e new fue l price s hav e decreased , on e woul dexpec t t o se e a sligh t decreas e inth e cos t effectivenes s o f th e additiona l emissio nreductio nachieve db y no t providin g a

nemissio ncredi t unde r standard s base donfirin g lo w sulfu r fuels .P.1 0



### Unde r standard s requirin g a percen t reductio ninemissions , a nemissio n credi t permit s th e installe dscrubbe r t o operat e a t a lowe r percen t reductio ntha nwoul dotherwis e b e required . Thus , th e differenc e i n annualize dcost s wit han dwithou t anemissio ncredi t i s equa l t o th e operatin g an

dmaintenanc e cos t difference s (i.e. , primaril y reagen t usage ) associate dwit hth e two level s o f percen t reduction . I t i s no t influence d b y th e pric e o f fuel ; a s a result , on e woul dno t expec t change s infue l price s t o influenc e th e cos t effectivenes s o f th e additiona l emissio n reduction s achieve db

y no t providin g a

nemissio ncredit .p.1 1



### REFERENCE S

1 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l Coa l Prices . Augus t 29 , 1986 . 2 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l Oi l Prices . Augus t 26 , 1986 . 3 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l Natura l Ga s Prices . Augus t 26 , 1986 . 4 . A nAnalysi s o f th e Cost s an dCos t Effectivenes s o f Allowin g S0 2 

### Emissio nCredit s fo r Cogeneratio nSystems . (Prepare dfo r U . S . Environmenta l Protectio nAgency) . Radia nCorporation , Researc h Triangl e Park , Nort hCarolina . Marc h1985 . pp . 3-37 . 5 . A nAnalysi s o f th e Cost s an dCos t Effectivenes s o f S0 2 

### Contro l fo r Mixe dFuel-Fire dStea m Generatin g Units . (Prepare dfo r U . S . Environmenta l Protectio nAgency) . Radia nCorporation , Researc h Triangl e Park , Nort hCarolina . Januar y 1986 . pp . 1-5 6 6 . Impac t o f New

Fue l Price s o

nth e Cost s an

dCos t Effectivenes s o f S0 2 

### Emissio nContro l o f Cogeneratio nSystems . (Prepare dfo r U . S . Environmenta l Protectio nAgency) . Radia nCorporation , Researc h Triangl e Park , Nort hCarolina . Apri l 15 , 1987 . pp . 1-11 . 7 . Impac t o f New

Fue l Price s o

nth e Cost s an

dCos t Effectivenes s o f S0 2 

### Emissio nContro l o f Mixe dFuel-Fire dSteam Generatin g Units . (Prepare d fo r U . S . Environmenta l Protectio nAgency) . Radia nCorporation , Researc hTriangl e Park , Nort hCarolina . Apri l 15 , 1987 . pp . 1-10 .



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